Edwards may have to answer to a federal grand jury's indictment that he knew some of the millions of dollars of campaign funds was being used to support Rielle Hunter, the videographer for Edwards's campaign, with whom he had an affair and the couple's daughter, The New York Times reported Monday.
People who have been subpoenaed and other observers said campaign accounts and the records of a non-profit organization with ties to Edwards have been scrutinized by George Holding, the U.S. attorney in Raleigh, a Justice Department lawyer, FBI agents and the Internal Revenue Service.
"They have the bank records for all the accounts, and they have been through them. Part of it is this whole financial maze," said Joe Sinsheimer, a former Democratic political strategist and political watchdog in Raleigh.
Edwards, who is back in the family's Chapel Hill home in the wake of the death of his wife, Elizabeth, in December, and trying to make a go of single parenthood, is also embroiled in a civil lawsuit brought by Rielle Hunter, the Times said.
Hunter wants back photographs of Edwards and their daughter and a tape showing Hunter and Edwards purportedly having sex.
The trial in that case was originally scheduled for Monday but was postponed until October.
If the grand jury in the federal case charges Edwards with misdemeanors, his best bet may be to strike a deal, the Times reported.
But if he faces felony charges, some say he would fight them.
"If it went to trial, the portrait of John Edwards that America has today would be way worse," Sinsheimer said.